The Japanese Earthquake and Tsunamis – Supplier management and preparing for supply chain disruption

(Here are the first couple of paragraphs of the post Jason Busch has published today regarding the events in Japan. If you have any interest in the implications from a supply chain point of view I urge you to read the whole piece here. It is a pretty definitive analysis).


After the death toll is counted in Japan and potentially other countries from the massive 8.9 Richter Scale magnitude earthquake that hit this morning and the subsequent Pacific Ocean Tsunamis, today is likely to be extremely tragic as measured by any geological standards -- historic or modern. The only potential saving grace that's already been pointed out by others in the media is that the quake and initial Tsunami struck Japan, which has among the strongest building standards and codes in the world. If the epicenter of a similar disaster had struck virtually any other country in the region (e.g., China) with lower building standards/codes, the death toll no doubt would be significantly higher than even the likely thousands of those that lost their lives already from the tragedy.

In disasters such as this, we need to immediately consider the broader economic implications and supply disruptions that might possibly result as the extent of the tragic affair becomes apparent -- not to mention the potential localized and global impact on commodity prices including oil, energy, metals, chemicals, grains and other base materials/agricultural products. From a supply risk standpoint, companies operating in Japan, Asia and the rest of the world need to be vigilant about potential disruptions that are likely to hit in the coming days (and subsequent weeks/months). A Reuters wire dispatch from this morning notes that "auto plants, electronics factories and oil refineries shut across large parts of Japan," in the wake of the disaster.

(Continued at SpendMatters US)

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Voices (3)

  1. Christine Morton:

    Just updating: he slept in Space Mountain and has finally made it back to his hotel. The word is other than convenience stores being empty, Tokyo is fine.

    1. Peter Smith:

      Glad your friend is OK. The pictures are just horrifying – it really was apocalyptic in places.

  2. Christine Morton:

    Right now a very close friend of mine is sleeping overnight at Disneyland Tokyo with thousands of other parkgoers. They can’t leave because the trains aren’t running. I can’t even imagine this tragedy in a business capacity yet – my thoughts go to all those affected.

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